GT Advanced Technologies Inc (NASDAQ:GTAT) together with its subsidiaries announced on Monday, October 6th that they commenced voluntary cases under chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of New Hampshire.
Apple Inc. (NASDAQ:AAPL)’s sapphire crystal supplier announced the surprise news today and anticipates the court will authorize the company to continue to conduct business as usual.
GT Advanced Technologies seeking debtor-in-possession financing
GT Advanced Technologies is a producer of advanced materials and crystal growth equipment for electronic products all over the world. In November, the company announced its signing a deal with Apple Inc. (NASDAQ:AAPL) to provide the iPhone maker with sapphire material.
In a statement issued today, GT Advanced Technologies Inc (NASDAQ:GTAT) indicated as of September 29, 2014 it had approximately $85 million in cash. The sapphire supplier is now seeking debtor-in-possession financing which would facilitate with immediate source of additional funds that would enable the company to satisfy the customer obligations associated with the daily operation of its business, including timely payment of employee wages and other obligations.
Chapter 11: “The best way to reorganize”
Exuding confidence, Tom Gutierrez, president and chief executive officer of GT Advanced Technologies said: “GT has a strong and fundamentally sound underlying business. Today’s filing doesn’t mean we are going out of business; rather, it provides us with the opportunity to continue to execute our business plan on a stronger footing, maintain operations of our diversified business, and improve our balance sheet”.
He further added: “We are convinced that the rehabilitative process of chapter 11 is the best way to reorganize, protect our company and provide a path to our future success”.
However, the company notes as is customary with public companies, NASDAQ may temporarily halt trading in the company’s stock pending receipt of additional information on the company’s financial condition.
In June, Apple Inc. (NASDAQ:AAPL) and GT Advanced Technologies Inc (NASDAQ:GTAT) opened up another sapphire glass plant in Massachusetts. GT used the $578 million prepayment from Apple to outfit the facility.
As reported by Valuewalk earlier, in September, GT indicated in its U.S. Securities and Exchange Commission filing about the drawbacks in aligning its production process. The company posted a loss on the products that were not fit for sale and inventory spoiled due to construction-related hurdles.
GT Advanced Technologies Inc (NASDAQ:GTAT)’s chief financial officer Raja Bal said that the second quarter expenses were higher than anticipated, making clear the complexity and challenges of ramping up the sapphire glass production operation. However, he indicated that even though the company is facing challenges, there is no doubt about the long-term potential of the sapphire glass, and is estimating a final payment of $139 million from Apple in October. To date, Apple Inc. (NASDAQ:AAPL) has made payments of $439 million.